As house prices keep plummeting, some London areas seem recession-proof. Below you can see reports on where is best to buy.
Fergus and Jo Stewart live in Fulham with their four-month-old baby, Sebastian, but they are hoping to move to a Hampshire village near Basingstoke. They intend to swap their two-bedroom flat for a four-bedroom cottage, which is not an unreasonable ambition considering the buoyancy of the London market. They both grew up in the countryside and want their budding family to do the same.
Their flat, which has a big garden with a studio at the end of it, is listed at £750,000 Jo bought it in 2004 and feels very fortunate to have benefited from the big rises in prices.
“The market went crazy,” she says. “I bought with my sister, who later moved out.” Happily, Fergus moved in, and prices moved up. The estate agent handling the sale says prices in the area have risen by 90-100 per cent since Jo bought.
But there is a snag. Jo, a ski travel specialist, and Fergus, an account manager at Berry Brothers, have found themselves competing with lots of other young couples for homes on the Hampshire-Wiltshire border. The London dividend is powerful here.
“There are lots of families like us moving out,” says Jo. “One house went in a fortnight for the asking price, and offers were only accepted from cash buyers.”
Meanwhile the rest of the country is struggling. On August 1, Nationwide reported continued house price falls over five months, to an average 13 per cent below their 2007 peak. It seems that many areas of London are Teflon-coated against the effects of the recession, and the outlook is almost absurdly optimistic. The Knight Frank estate agency says that prices have risen by 38 per cent since the credit crunch, with further growth of 24 per cent expected by the end of 2016. About 55 per cent of purchases are being made by overseas buyers, who want to store money in a global safe haven. In June, Knight Frank calculated that £1 million invested in central London property in March 2009 would have grown by £407 per day, or £12,400 per month.Fashionable areas are being stretched east and west. A significant report recently published by Knight Frank on the expansion of “prime” London decided that the City and City fringe are plumped up enough to be considered prime. The City has been boosted by big new developments such as The Heron at Barbican and Three Quays at Tower Hill, and has hopes pinned on Crossrail, due to open in 2019.
The “City Fringe” encompasses areas like Clerkenwell, Farringdon, Shoreditch and Whitechapel, where gentrification is waving its wand and creatives throng. Old Street, a magnet for internet companies, has been renamed “Silicon Roundabout”. Google plans to move in as well, providing the cherry on the top. On the Thames riverbank, Knight Frank added the South Bank to the prime category in 2007, when it finally had enough high-value flats to supply the top end of the market.
London is stretching upwards as well. The Shard has changed the skyline, offering apartments at stratospheric levels and prices. Developers are trying to incorporate a tower into everything they touch. Berkeley’s One Tower Bridge will be finished with a 20-storey tower. Mount Anvil is to build a 36-storey tower at Old Street, which has been dubbed Silicon Tower, and Manhattan Loft Corporation has 42 storeys going up to dwarf everything around it in Stratford next year.
Internationals may be the biggest buyers in central areas but, says Savills’s World in London report, released in July, most sellers are British. Internationals want to purchase flats off-plan, and this has also changed the pecking order in many areas of London.
“They go where the product is, so they will buy at Canary Wharf rather than Bloomsbury,” says Yolande Barnes, head of Savills research. “Meanwhile, young British buyers are being displaced to Newham, which is still affordable and is very exciting.”
But will the foreign buyers crucially underpinning London prices stay the course? “We expect the proportion of prime overseas buyers to fluctuate between 25 and 40 per cent according to the market, currency and global conditions, but they will without any doubt remain an important force,” she says.
So canny Britons are taking advantage of the price increases and the foreign interest, and consolidating assets. Phil and Tina Laing, with their boys, Thomas, six, and Louis, four, are selling a five-bedroom house in Englewood Road, Clapham, for £1.595 million through, and moving to Surrey.
“We bought at the peak and then the market vanished, but we poured our heart and soul into it because it is a home,” says Tina. “After 18 months things picked up. This area is almost recession-proof. There are so many hard-working couples, good prep schools, Clapham Common to run in, restaurants and shops, and other young mothers to be friends with.” They will rent in Haslemere before they buy.
Many pied-à-terres and one-bedroom flats are selling. Some buyers invest in London areas with growth potential.
“Owners are raiding their piggy-bank homes to monetise their assets,”. “using the cash to secure their personal finances, help upgrade their main residence or reinvest in a higher-yielding buy-to-let property.”
Where to go hunting:
1. London Bridge Quarter: The Shard is the tallest tower in Western Europe, where grand apartments might fetch £30m each.
2. Kings Cross: £500m redevelopment, 1,900 new homes, 20 new streets, 10 new public spaces.
3. Stratford: the Olympic Village provides 2,818 new homes with potential for another 2,000.
4. Nine Elms/Battersea: regeneration includes 16,000 new homes, new American Embassy. Battersea Power Station has at last been bought.
5. Earl’s Court: plans for a £8bn makeover, 6,500 new homes, though tenants are opposing it in the High Court.
Source: The Telegraph Property